Did you know that the definition of 'Recession' includes nothing about stock prices? Stock markets follow corporate profits (and the expectations of them). If profits become shaky, investors have less demand for stocks.
Consumer spending is about two-thirds of GDP in the US, and around 50% of global GDP. If consumers get stressed about their situation - such as worry about their employment, difficulty paying for housing, cost of living rises, defaulting on credit cards and other debt - then research shows a direct impact on the economy in a 3-6 months time period.
This May 2025 presentation discusses these factors, and also highlights strategies investors can use to prepare for a potential market downturn, rather than try to predict precisely when it might happen.
